Constellation shares plunge after Justice Department decision

Constellation Brands Inc.’s plans to acquire the remaining half of its Crown Imports LLC joint venture in a $1.85 billion deal have been put on hold due to a lawsuit announced Thursday by the U.S. Justice Department.

Shares of Constellation Brands (NYSE: STZ) plunged following the news. Shares were trading midday near $32.30, down 17.5 percent from Wednesday’s close of $39.17. It fell to as low as $28.39, down more than 25 percent, on Thursday before regaining ground. The stock had hit a 52-week high this week.

The suit seeks to stop Anheuser-Busch InBev SA from buying the half of Mexican brewer Grupo Modelo it does not already own, saying the $20.1 billion deal would lessen competition in the U.S. beer market.

Last year, Constellation Brands announced the Crown Imports deal with Anheuser-Busch, which would give Constellation total control of distribution of popular Corona beers, among other products, in the United States.

Constellation Brands owns half of Crown Imports, a 50-50 joint venture with Grupo Modelo. Constellation signed a definitive agreement with AB InBev to purchase the remaining interest as AB InBev completes its proposed acquisition of Modelo.

The Victor firm had expected the deal to close this quarter, but no longer does given the Justice Department action.

Constellation Brands said it was disappointed with the Department of Justice’s decision.

“The proposed transaction would further establish Crown Imports as a more independent and competitive entity and solidify its position as a major player in the U.S. beer industry,” the company said in a statement.